An Analysis of Professional Builder&rsquo;s 2007 Green Building Survey

What do homebuilders really think about green? What effect has it had on the marketing and sales of their homes? Is it a fad, or will it define home construction techniques for years to come? The results of Professional Builder’s green building survey sheds light on answers to these multi-faceted questions.

Everyone is jumping on the green bandwagon these days, from Al Gore's "An Inconvenient Truth" winning an Oscar to the summer's Live Earth global warming concerts. Green, carbon footprint, sustainable design and environmentally friendly are words and concepts bandied about with ever increasing zeal and frequency. And the home building industry is far from being exempt.

California has proposed legislation attempting to establish a green building requirement in the state. Assembly Bill 1058 would require all home builders to build green by 2013. The proposed law would let home builders voluntarily build green for the first two years, followed by two years of builder feedback and possible revisions. Then the law would become mandatory.

Both NAHB and the U.S. Green Building Council (USGBC) are lobbying for national standards based on their own guidelines. There are programs such as Building America and Energy Star (both sponsored by the U.S. Department of Energy; Energy Star also partners with the Environment Protection Agency); the American Lung Association Health House; and several others from entities promoting their own green programs and guidelines on a national level — not to mention the myriad regional and local programs.

So just what does it mean to build green? The definition is in the eye of the beholder. How are builders responding to this nebulousness? Many have forged ahead with one of many current sets of green guidelines available; some are being guided by what makes sense to them, using a certain percentage of "green" materials (but again, who's defining green?), a certain degree of energy efficiency, indoor air quality, resource conservation, and sustainability, or a combination of all of the above.

But what do home builders really think about green? And how do they perceive its effect on their business? Is it flash in the pan, or will it define construction techniques in the industry for years to come? Our survey attempts to answer these multi-faceted questions. The results are enlightening, and sometimes surprising.

You can't build green until you know what it is. In response to the question "How does your company define green," 46 percent of respondents said that a green home is one that meets criteria established by a national certification program; 41 percent think it's a matter of having a certain percentage of building materials that are green used in the home; and 29 percent said the home should meet criteria established by a local green building program (responses overlapped).

What kind of builders feel this way? Among builders in our survey who build more than 10 homes a year, 53 percent said a home should meet criteria of a national certification program versus 40 percent of those who build one to 10 homes a year. For builders who build one to 10 homes a year, 48 percent said using a specific percentage of green materials should determine whether a home is defined green versus 30 percent of those who build more than 10 homes a year.

This might indicate that larger builders feel its wise to let a nationally recognized third party define green, versus a definition based on the builder's own opinion about the greenness of a home and the materials used, thus possibly reducing the risk of over promising a green result that can't be qualified.

Third-party certifications allow builders to avoid the sticky wick of defining for themselves which materials are truly green as well as what percentage of green materials makes a home green. Still, many builders — 41 percent of those in our survey — think this is best the way to measure green. So what standards do these builders apply in defining a green building material?

Among several choices, energy efficient tops the list at 89 percent. Renewable resources came in second, and recycled content third. Further down the list were whether the product was locally produced, the manufacturer's environmental policies and the number of points awarded by the USGBC's LEED program. (LEED standards have been used in commercial, industrial and multifamily buildings but its official certification program for new homes, LEED for Homes — currently in a pilot program — will launch later this year).

Of those respondents (41 percent) who said green should be determined by the percentage of green material used in the home, 44 percent think that percentage should be between 11 and 30 percent; 29 percent think it should be between 31 and 50 percent; and 24 percent think it should be above 50 percent.

Should there be some minimum standard of performance or sustainability before a builder can define and market a home as green? Yes, according to 87 percent of respondents. Nine percent weren't sure, and 5 percent said no. Interestingly, 38 percent of respondents said that either federal, state or local government should set these standards. That's not the majority — 61 percent think a trade association, an independent third party, or some other entity should have this responsibility — but it's a bit surprising that a sizeable number seem to think government intervention in this area is a good idea.

Now we have an idea of some ways builders define green. The question is whether or not it is important enough a phenomenon to change how they build their homes. Of all the builders who answered the question, 67 percent strongly or somewhat disagreed with the statement "Green building is a fad." There was no great difference between those who build one to 10 homes a year (64 percent) and those who build more than 10 homes a year (71 percent); nor was there a big difference between those who only build custom homes (65 percent), production homes (74 percent), or a combination of both (69 percent). Of those who don't see green building as a fad, 83 percent believe green building has had some positive effect on their sales; and 83 percent also said that green building is extremely important to their market strategy.

Among builders who build between 91 and 100 percent single family, 69 percent somewhat or strongly disagree with the idea that green building is a fad. Builders who build strictly multifamily made up only three percent of our survey respondents. Seventy five percent of them somewhat or strongly disagree that green building is a fad.

How important are environmental goals when a builder is planning a new residential development? It is extremely or somewhat important, said 81 percent of our respondents. Of those who strongly disagree that green building is a fad, 92 percent said environmental goals are somewhat or extremely important to them in planning new residential developments.

When planning a new residential development today versus five years ago, we asked to what extent if any has the importance of environmental goals changed. It is much more or at least somewhat more important today than five years ago for 86 percent.

A quarter of all respondents said green building is extremely important to their market strategy, and 45 percent said it was somewhat important. Seventy two percent of those who build one to 10 homes a year felt it was extremely or somewhat important, while 66 percent of those who build more than 10 homes a year did. There's no huge difference between those who build exclusively custom homes, production homes or a mix of both — all hover around 70 percent.

"Green building has had an effect on homes sales," according to 48 percent of respondents. A quarter said it has moderately improved sales; 18 percent said it increased traffic; and 11 percent said it closed sales that might have gotten away. Three percent said it dramatically improved sales. Fifty-two percent said positioning their homes as green has had no effect on sales at all. Contrast this with builders who said green building is extremely important to their market strategy; 40 percent said green has moderately improved sales, 32 percent said it has increased traffic, 21 percent said it has closed sales that otherwise would have been lost, and 11 percent said sales have dramatically improved. And 17 percent said it had no effect on sales whatsoever. The perceived expense of building green and its effect on sales

A whopping 92 percent of builders believe green building increases the overall cost of a home. Of this group, the largest percentage — 38 percent — said it increases the cost by 6 to 10 percent. Forty-one percent of builders for whom green building is important (somewhat or extremely) to their market strategy that believe green building increases the cost of a home said green building only increases the cost by 3 to 5 percent; 34 percent of this particular group said the increase is between 6 to 10 percent; and 21 percent said the increase is 11 to 20 percent. No one in this group thought green building increased the cost of a home by more than 20 percent.

There is a bit of a disconnect here: More than half of builders said green building is not a fad, and 70 percent said green building is important to their marketing strategy, but 52 percent of surveyed builders said that green building has had no effect on their sales (though it was noted that this drops to 17 percent for builders who said green is extremely important to their market strategy). Furthermore, 92 percent of respondents said green building increases the overall price of the home. Only 29 percent of builders said buyers are extremely or somewhat willing to pay more for green features in their home; an almost equal number, 30 percent, said buyers are somewhat or completely unwilling to pay more for green features. It would seem that builders are hedging their bets that buyers will soon have a change of heart and be more willing to buy what they perceive as a green home and pay more for it. Otherwise, their actions don't fit their glum expectations of their buyers.

For those who said green building is extremely important to their marketing strategy, 53 percent define a green home as one that meets criteria of a national certification program. No doubt these designations play heavily in their marketing strategy ("We are a LEED-certified builder, Energy Star builder, etc.") and have a certain cache. Only 40 percent say the criteria of local programs define a green home for them. Of course, depending on the program and the market, the local certifications may not be as familiar to buyers as the national ones.

What value does green have for home buyers? We asked builders in our survey how important certain green features are to their customers. Builders said energy efficiency was somewhat or extremely important to 97 percent of their buyers; indoor air quality was selected by 83 percent; sustainability by 56 percent; and resource conservation by 54 percent. Energy efficiency's high ranking may reflect the fact that buyers can more easily understand and appreciate the benefits of building green when it allows them to heat and cool their homes more cost effectively. Homes that can demonstrate a measurable energy cost savings over time can be more easily sold at a higher price, with the expectation the monthly utility cost savings could exceed the additional cost of the home in the long run.

Builders who market green no doubt understand this connection: All survey respondents (100 percent ) for whom green building is somewhat or extremely important to their market strategy said energy efficiency is somewhat or extremely important to their home buyers. No one in this particular group said it is a neutral or unimportant factor. The numbers were nearly similar — 98 percent — for builders who said green building was only somewhat important. But it's 91 percent — still extremely high — for builders for whom green building is a neutral factor, somewhat or not at all important to their market strategy. Even builders who don't see green as part of their market strategy recognize the importance of energy efficiency to their buyers.

The importance of indoor air quality may represent a perceived health benefit to buyers — an opportunity to avoid harmful chemicals, mold and other airborne particulates in a home that can make them and their families ill. Among those for whom green building is extremely important to their market strategy, 88 percent thought IAQ was somewhat or extremely important to their buyers. For those to whom green market strategy was somewhat important, the importance (somewhat and extremely) of IAQ was 90 percent. Among those who said green building has a positive effect on sales, 90 percent said IAQ is somewhat or extremely important to their home buyers.

When builders use a green certification program to define their homes as green, which ones are they likely to use?

Energy Star is the program used by 62 percent of builders in our survey. NAHB's green guidelines (it's not specified if builders are referring to the NAHB's Model Green Guidelines or a local program that uses the guidelines as its foundation) have been used by 32 percent, according to the survey. The USGBC's LEED certification has been used by 19 percent.

Some builders may hesitate to commit to a particular third-party green building program for fear it would be too complicated and restrictive in practical use.

Builders are most familiar with the green building programs offered by Energy Star, NAHB and LEED. Most have never heard of Green Globes, Environments for Living or Building America.

We asked builders in our survey to rate the green building programs they have used in terms of ease of use and relative stringency and flexibility. Federally sponsored programs such as Building America and Energy Star were said to be somewhat or extremely easy to use by 39 percent of builders who have used them; 43 percent said these programs were somewhat or extremely stringent; and 20 percent said they were somewhat or extremely flexible.

Using the same criteria, 30 percent of builders who have used NAHB's green guidelines said there's some degree of ease of use; 33 percent said they have a degree of stringency, and 25 percent said they are in some way flexible in their requirements. Among the eight types of programs specified, LEED ranked least in terms of ease of use — only 13 percent of builders rated the program that way; 67 percent said it was somewhat or extremely stringent, and only 18 percent said it was somewhat or extremely flexible.

The perception of LEED's program seems to coincide with how the USGBC has positioned it. "There are a lot of builders out there who are just thinking about going green, and quite frankly I think LEED-H would be a fairly big leap for them," said Jay Hall, acting program manager for LEED for Homes in the July 2006 issue of Custom Builder, PB's sister publication.

Though there are homes that have participated in the LEED for Homes pilot program and have been certified through it, it should be noted again that LEED-H will not launch officially until later this year. The perceived stringency of LEED may be based somewhat on the requirements of its other programs.

The American Lung Association Health House rates near the bottom both in terms of usage and familiarity by builders in our survey. But IAQ rated highly —- second only to energy efficiency — as the element of green building in which most buyers are interested. If builders were more aware of the program and its focus on IAQ, the program might be weighted as more popular, though its rigorous requirements might still prohibit its wide use.

After all has been said and done, there is still no universally agreed upon definition for green. It's a many splendored thing, multiply defined, and embraced as a valued target for building homes today and possibly for many years to come.

In June, survey invitations were e-mailed to a random sample of home builders, developers, contractors and modular/sectional home manufacturers who subscribe to Professional Builder. Survey responses were collected online from June 1 through June 19, 2007. To encourage participation, Professional Builder donated $10 to Habitat for Humanity for each of the first 250 completed surveys. A total of 291 useable surveys were completed by the closing date.

Every home Bennett Homes builds is green. Most of its efforts involve processes such as erosion control, waste reduction and recycling — things that may not be as visible to buyers as, say, energy-efficient appliances but are extremely eco-friendly. The Bellevue, Wash., company was one of the first home builders to introduce the Built Green program in Washington State.

In June 2007, Bennett hired a full-time green officer to analyze its business practices and ensure the company walks the green walk. The builder recently started printing collateral materials on recycled paper and plans to replace its fleet of cars with hybrid vehicles.

Bennett Homes won the 2007 Built Green Pioneer Award from the Master Builders Association (MBA) of King and Snohomish counties for its contributions to Built Green since the program's inception in 2001. Company Chairman Todd Bennett was president of the MBA in 2003 and has been on the board of directors since the late 1990s. Bennett's involvement with national committees gave him broad exposure to green- building practices and programs.

"He felt that it was a natural fit for the general philosophies of our marketplace," says Gayl Van Natter, vice president of sales and marketing for the firm. Bennett and President Paul Glosniak convinced the MBA to adopt Built Green in its purest state, says Van Natter.

"We're building in jurisdictions where people might call themselves Built Green, and certainly there are green components, but it isn't nearly as regulated and strict as it is in King and Snohomish counties," she says. "In some of those outlying places, builders are being allowed to use [the Built Green] icon with pretty minimalistic criteria."

The company projects 225 closings in 2007 at an average price of $723,000. It builds custom and production homes in five counties, including a resort community in the Cascade Mountains east of Seattle.

Grey Lundberg, president of Grey Lundberg/CMI Homes, which has offices in Bellevue, Wash, and Cle Elum, Wash., is a recent convert to green building. Here's what inspired him and where the company's headed.

Q. What inspired you to build green?

A. A few years ago a client of mine asked me about building a green demonstration home, and I was intrigued. I had preconceived notions that it was a trend in building that required me to build in a fashion that was both unusual and risky. What I found out was that it was building with higher energy efficiency, better indoor air quality, overall higher quality and better stewardship of our building practices — all of which, as a high quality builder, I was already engaged in at a certain degree.

Q. What plans do you have the future?

A. Our plan is to remain at the cutting edge of technology in our custom home building and remodeling market. Our goal is to certify (with verification) every project we do at the highest level of certification.

Q. Is it important for builders to build green?

A. Absolutely. It's not just a trend, it is the future. There are so many things that we as builders can do to improve the short-term and long-term costs to society of poorly constructed buildings. I used to be concerned about being labeled a green contractor. Now clients are seeking me out.

Q. What sets you apart from the other green builders?

A. We have taken green building very seriously and incorporated all aspects of energy efficiency, indoor air quality and durable/sustainable construction into our high-end custom building market. I believe what starts in the luxury market trickles down to the production market.

Green builder Michael Chandler, president of Chandler Design-Build in Mebane, N.C., has found a new way to dedicate his time to building quality, energy-efficient homes. Chandler only builds four homes a year, allowing him to create a profitable workplace for his employees and also serve as a speaker, mentor and teacher for other builders on green building. An integral part of that is his involvement in the Green Building Initiative, which focuses on builders who are not building to green and high-performance standards. He has 30 years of green building experience under his tool belt, and he uses it to his advantage.

"I can make enough profit on four homes to support my family, build equity in the company and have enough to give generous profit sharing to my employees while working an average of less than 38 hours per week," Chandler says.

"We only build four houses a year, and it is not enough to make a personal impact. Being part of the Green Building Initiative, I am able to influence hundreds of builders who will go out and build more houses and make a positive impact. ...With the current recognition and current run-up on fuel prices, now is the time to bring green building to the mainstream."

How do you keep up with sustainable design when you're at the forefront of the market? If you're Michelle Kaufmann, AIA, you hook up with museums to design homes for exhibits on sustainable living that bring together the best of the industry. Then you make sure to network with those people, trading e-mails and swapping ideas with innovators such as David Gottfried.

That networking has no doubt helped her and her Oakland, Calif.-based firm, Michelle Kaufmann Designs, to become one of the leaders in green building. MKD specializes in prepackaged modular homes, and now communities, too — all sustainable.

Green products, although important, are not entirely where it's at; the company boasts benefits of its own factory-built construction; eco-friendly finishes; and a tight building envelope, a key to successful sustainable design, she says. She refers to "inappropriate design in inappropriate areas," taking Californian-Italian courtyards and designs, for example, and placing them in cold climates.

Bottom line: What's green in Chicago is not the same as what's green in Los Angeles.

Her tips for builders aiming for greener practices are simple: know your location, and don't focus on renewable materials only. "People are happiest long-term, over time, with insulation systems, mechanical systems and water choices that make sense and end up saving them money in the long run."

"The key to green design success is making it easy for people: prepackaging green solutions. What we find is that people want to go green — they want it — but it has to be cost-effective and easy. As designers and builders, the more we can make it easy by prepackaging, the more success we'll have."

Look for MKD's launch of its first green product, lighting that doubles as a vase.

"Don't wait on getting started with green building. You'll feel good about it, and your company will benefit," says Rick Hunter, managing partner of Sage Homebuilders when asked what would be the one thing he would relay to other home builders about green home building. He adds that builders shouldn't be intimidated by all of the requirements for building green. "It's not as bad as it looks," he says, but admits it is a little more challenging.

Hunter should know. His firm is a bona fide "green only" home builder. Based in St. Louis, Sage Homebuilders was launched in 2005 by Hunter and his partners Jason Stone and Mike Greene. They are hardly industry neophytes, however, having a combined experience of more than 30 years in home building.

Being a "green only" home builder means that every home Sage builds will meet either NAHB or LEED certification standards. The level of certification will depend upon what clients want to include in their home.

The firm is currently putting the finishing touches on its "near-zero-energy" home, which served as a showcase tour home during the NAHB's National Green Building Conference in St. Louis earlier this year. Builders attending the conference had the opportunity to visit the Sage home mid-construction to view the behind-the-scene green construction techniques and materials.

Has green-only been good for Sage Homebuilder's business? "We have more business right now than we can handle," Hunter says. "I believe that's a testament to the rapid growth of demand for green homes."